Correlation Between Menteng Heritage and Sentra Food

Can any of the company-specific risk be diversified away by investing in both Menteng Heritage and Sentra Food at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Menteng Heritage and Sentra Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Menteng Heritage Realty and Sentra Food Indonesia, you can compare the effects of market volatilities on Menteng Heritage and Sentra Food and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Menteng Heritage with a short position of Sentra Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Menteng Heritage and Sentra Food.

Diversification Opportunities for Menteng Heritage and Sentra Food

-0.21

Correlation Coefficient

Menteng Heritage  Sentra Food

Very good diversification

The 3 months correlation between Menteng and Sentra is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Menteng Heritage Realty and Sentra Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentra Food Indonesia and Menteng Heritage is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Menteng Heritage Realty are associated (or correlated) with Sentra Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentra Food Indonesia has no effect on the direction of Menteng Heritage i.e., Menteng Heritage and Sentra Food go up and down completely randomly.

Pair Corralation between Menteng Heritage and Sentra Food

Assuming the 90 days trading horizon Menteng Heritage is expected to generate 4.43 times less return on investment than Sentra Food. But when comparing it to its historical volatility, Menteng Heritage Realty is 1.55 times less risky than Sentra Food. It trades about 0.01 of its potential returns per unit of risk. Sentra Food Indonesia is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12,400  in Sentra Food Indonesia on September 1, 2024 and sell it today you would lose (900.00) from holding Sentra Food Indonesia or give up 7.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Menteng Heritage Realty  vs.  Sentra Food Indonesia

Menteng Heritage Realty

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Menteng Heritage Realty are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Menteng Heritage disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sentra Food Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentra Food Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sentra Food is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Menteng Heritage and Sentra Food

The main advantage of trading using opposite Menteng Heritage and Sentra Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Menteng Heritage position performs unexpectedly, Sentra Food can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sentra Food will offset losses from the drop in Sentra Food's long position.

The idea behind Menteng Heritage Realty and Sentra Food Indonesia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.